ZURICH: The Swiss franc traded close to a six week low against the euro on Thursday as investors bought the single currency to cover short euro-dollar positions taken in the wake of data showing weakening business sentiment in Germany.
Market chatter continued to circulate that the Swiss National Bank could raise the 1.20 francs per euro floor it imposed 19 months ago to stave off recession, keeping the franc under pressure.
The SNB has declined to comment on the matter.
The franc has traded largely in tandem with the euro since the cap was imposed, but has drifted away from the 1.20 limit this year as the outlook for the euro zone appeared to improve.
"The franc has been weak recently mainly because of declining risk premia in euro land and the drop in tension after Italy named a president," said Sarasin analyst Ursina Kubli.
"But economic data in euro land has deteriorated sharply, so concerns about the crisis could gain momentum again, and we would forecast a higher Swiss franc against the euro on this basis."
The franc rose 0.1 percent against the euro compared to the New York close, to trade at 1.2336 francs per euro at 0723 GMT.
The franc was 0.1 percent firmer against the dollar at 0.9451 francs per dollar.
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